Leading figures in the pub and restaurant industry are sounding alarm bells regarding recent tax hikes introduced in last month’s Budget. In a letter signed by over 200 industry leaders, they argue that the substantial increase in National Insurance Contributions (NICs) will inevitably lead to business closures and significant job losses across the sector.
The letter highlights that the hospitality sector is particularly vulnerable to these unsustainable financial burdens. With employers facing an increase in NICs from 13.8% to 15% starting in April, coupled with a reduction in the salary threshold from £9,100 to £5,000, businesses claim they lack the ability to transfer these costs to consumers.
The signatories assert that this financial strain will force many companies to reconsider their investment plans, potentially leading to drastic job cuts and reduced working hours for employees.
Prominent signatories include Kate Nicholls, chief executive of UKHospitality, as well as executives from notable firms such as Fuller’s and Stonegate Group. Collectively, these businesses employ tens of thousands of individuals throughout the UK.
In response to these challenges, industry leaders are urging the government to implement protective measures for businesses that employ low-wage earners. They argue that current changes to NICs disproportionately affect lower-income workers and could undermine flexible working arrangements relied upon by many employees, including older workers and parents.
The letter outlines two potential solutions:
Establishing a new employer NICs band between £5,000 and £9,100 at a reduced rate of 5%.
Introducing an exemption for employees working fewer than 20 hours per week.
While Chancellor Rachel Reeves has indicated that her proposed NIC changes could generate £25 billion annually for public services like the NHS, she acknowledges the criticism surrounding these measures. However, she maintains that such steps are necessary for securing robust public finances.
As the hospitality sector grapples with these fiscal challenges, the future remains uncertain. The call for systematic reform reflects broader concerns about maintaining employment levels and supporting small businesses during a time of economic pressure.
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